26. Effect of Economic Activities on the Financial Performance of Listed Commercial Banks in Kenya

Abstract

Over the years, corporate social responsibility (CSR) has evolved from a practice adopted by a limited number of companies to a global phenomenon. Today, CSR is widely recognized as a company's responsibility to its diverse stakeholders, including investors and the broader community. Consequently, the field of CSR has garnered considerable scholarly attention aimed at understanding its impact on various aspects of business operations and performance. This study explores the relationship between economic activities and the financial performance of listed commercial banks in Kenya, guided by the Triple Bottom Line Theory and Stakeholder Theory. Employing a longitudinal research design spanning the years 2016 to 2020, the study utilizes a correlational research approach to elucidate how investments in CSR activities influence banks' financial performance. The research employs a stratified random sampling technique to select participants from the total population of 42 commercial banks in Kenya, focusing on the 11 banks listed on the Nairobi Securities Exchange (NSE). Data collection relies primarily on a questionnaire crafted to capture both independent variables (economic activities) and the dependent variable (financial performance). Data analysis utilizes SPSS version 23.0 software, employing inferential statistics such as linear regression and paired t-tests. The findings indicate a positive and statistically significant relationship between economic activities and the financial performance of commercial banks in Kenya. Thus, the study concludes that economic activities exert a beneficial impact on the financial performance of commercial banks in the Kenyan context.